Legal Question in Wills and Trusts in Arizona

Re: Life insurance benificiary being minor child

In my opinion, the insurance company or Motorola is

deceiving you or the father. They would like to keep

it invested in funds that they manage (ultraconservatively,

by the way, which is really imprudent in my opinion and

according to the law of SOME -- but not all ! -- states).

They would make a little more money holding onto it longer

because they will charge it some fees while they do so.

But, for good reasons in my belief, they'd rather have you think

that than end up paying the money out to someone who might blow

it all instead of saving it for the kid to have later.

That reminds me: I must tell you that I don't know your state's

laws, either on investment strategies OR on payments to minors, but

I'll continue to give you an opinion worth something akin to what

you've paid me for it:

If a conservatorship has been created by a court, the usual law is

to allow the conservator or for that matter practically any competent

adult (under Uniform Transfers to Minors Acts as adopted in MANY states!!)

to take the funds and hold them / invest them, etc. for the children until

they reach the age of majority.

However, there are two things to note: a) Funds of the child may generally

only be applied to their basic support needs when the parent is actually and

really unable to do so, under the UTMA law.

b) It is the parent's obligation to provide support

under state law using the parent's money; use of the funds for support which

relieves the parent of an obligation is actually a taxable event for the parent!

(In other words, if dad spends $10 of the UTMA funds for a kid's clothes, even

though he's already spent that $10, and even though it was for the kid, there's

a federal tax on that as if it were income to him!

c) Any money spent by the adult / custodian under UTMA / conservator, etc. against

the law is money for the which the adult child will have the right to sue that

person for from the time the child actually learns of it (or the age of 21, whichever

is later) until the number of years in the statute of limitations later!

Courts here would like a guardian of the estate (like a conservator) to post

bond (security) before they will appoint him, to make sure he is and

will be good for it when the time comes. They'd like also to see some

investment savvy.

Income to the children while they are 14 or under probably is taxed

in the parent's estate, and after that age goes on a separate tax return

for the kid though prepared and even signed by the guardian / conservator.